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The NCUA today published in the Federal Register its final rule to resolve litigation surrounding its 2016 field of membership (FOM) rule. The rule is set to take effect 30 days after publication, or Oct. 14.

The changes were proposed following the D.C. Court of Appeals' August 2019 decision largely in favor of the NCUA in the American Bankers Association (ABA) lawsuit, which sought additional explanation of the NCUA's decision to eliminate the urban-core requirement for local communities based on core based statistical areas. Putting an end to the litigation, the U.S. Supreme Court in June declined ABA's petition to hear the lawsuit after the appeals court declined to rehear the case en banc.

The final rule, approved in July:

• readopts a provision from the 2016 rule to allow applicants to designate a Combined Statistical Area (CSA) as a well-defined local community if the population is 2.5 million or less;

• provides additional explanation to support the elimination of a requirement to serve the core area of a Core-Based Statistical Area (CBSA); and

• adds an explicit provision regarding potential discrimination in the FOM selection for a CSA and CBSA.

Following the Supreme Court's decision to not hear ABA's challenge, NAFCU called on the NCUA to reinstate any FOMs removed due to the litigation. The NCUA issued a Letter to Credit Unions indicating it was in the process of doing so with regard to rural district FOMs, and when finalizing the rule in July said previously-approved CSA FOMs that were held up due to the litigation would also be reinstated.

Get more insights into what the final rule means for credit unions in NAFCU's Final Regulation Alert.